Online Retail

From Flea Market to Internet Fashionista

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Some experts think the vintage fashion market could be worth around €10 billion in Europe. Source: Infographics

On the shopping streets of Germany in late summer, one sees the same signs everywhere: “Sale!”, “70% Reduction Now!”, “Extra Discount on Already-Discounted Stock!”

Fashion retailers are frantically cutting prices in time for fall, but it’s a scene that’s just as likely to happen mid-season too. The retail apocalypse – mass store and mall closures across the US – is happening to a certain extent in Germany too.

Consumers are buying online more than ever before and now there’s another contender in the arena: second-hand clothing. And now it is going online as well. For a long time, used clothing was a niche market. Only serious fashionistas and bargain-hunters would seek out cast-off diamonds in the rough.

But the market is changing rapidly. For many young people, owning older clothes comes with a new cachet, especially if they were made before mass production. For them, sustainability is a chief concern.

American second-hand giant, thredUP, sees the potential in Europe. The San Francisco-based company, which has doubled its revenues in the last three years, just started a German online portal. “We are looking at similar growth this year,” James Reinhart, the company’s chief executive and co-founder, told Handelsblatt.

“When buying clothes, some younger customers are even considering resale value. ”

Cécile Wickmann, founder, Rebelle retail website

There are no figures as to the exact size of the second-hand market in Germany, but demand is clearly rising. Estimates range from €500 million to €1 billion ($600 million to $1.2 billion). Some experts think it could be worth 10 percent of luxury fashion, or around €10 billion, Europe-wide.

Even these figures are small compared to the United States, where last year on- and offline businesses turned over $18 billion in revenue from used clothing, shoes and accessories, according to thredUP’s figures. The portal thinks the market will double by 2021, reaching $33 billion.

“When buying clothes, some younger customers are even considering resale value for later,” says Cécile Wickmann, head of the Hamburg-based online portal, Rebelle.

Rebelle resells high-end brands such as Louis Vuitton, Prada, Gucci, Chanel and Burberry. Alongside Germany, the most important markets are Austria, Switzerland, Britain, Italy and the Netherlands, and these bring in eight figures in revenue, according to Ms. Wickmann.

The company’s German competitors include Vite EnVogue, one of two brands from Reverse Retail, another Hamburg-based fashion startup. It is pursuing a two-pronged strategy: “We sell our top brands on our Vite EnVogue platform, and buy items through the site Buddy and Selly,” says chief executive Karolin Junker.

In the past year, a quarter of all German fashion sales were Internet-based. Across Europe, 8 percent of all luxury purchases were made online in 2016, the consultancy McKinsey found in a recent study.

Luxury is obviously where the most money is, but the entire second-hand online market still has much potential. Global fast fashion chains such as H&M, Zara and Mango have destroyed much of the smaller competition in Germany already, leaving consumers bored of shopping from the same shelves in every town. Because fast fashion is produced cheaply, many pieces are so low in quality they don’t even last longer than a couple months. Additionally there are consumers’ concerns about factories where conditions for workers are poor, a reality that doesn’t sit well with those shoppers feeling more socially- and environmentally responsible.

ThredUP‘s Mr. Reinhart emphasizes that his company carries over 35,000 brands, offering “a much bigger and better-value range than discount outlets.” His stock ranges from second-hand H&M to expensive brands.

Traditional fashion retailers do not seem worried yet. “Obviously we would prefer consumers to buy new clothing … [second-hand clothing] is still just a small part of the market,” says Jürgen Dax of Textil BTE, the trade organization for Germany’s fashion retailers.

 

Georg Weishaupt covers the luxury and fashion industry for Handelsblatt. To contact the author: weishaupt@handelsblatt.com

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